Agrofert Remains In Babis’s Control: Transparency International

Prague, June 19 (CTK) – Czech PM Andrej Babis continues to control the giant Agrofert holding, the Transparency International (TI) group wrote today, citing the Slovak register of the public sector’s partners, but Babis dismissed the information, saying he had transferred Agrofert to trust funds.

TI insisted that Babis controls Agrofert even after transferring it to two trust funds.

In the Slovak register, the Slovak-born Babis figures as one of the final users of Agrofert operation’s effects, a status of the individuals who either direct or control the operation of corporations, which, on their part, operate for the benefit of these individuals.

Babis figures as the final user of the effects in Slovak register’s documents worked out by a lawyers’ office representing Agrofert. As a reason they say that Babis is the founder of the [two] trust funds to which he transferred Agrofert in early 2017, and at the same time, he is the person for whose benefit the funds are supposed to work.

TI says that Babis’s position as a person in control of Agrofert means his clash of interest as a member of the cabinet that decides on the granting of subsidies to Agrofert,

“Since the European Parliament decided some time ago that companies owned by politicians should not receive subsidies, the question arises whether the Agrofert holding’s eligibility for drawing public money should be checked once again,” David Ondracka, head of the Czech branch of Transparency International, wrote in a press release.

Babis dismissed any controlling of Agrofert on his part.

“This is nonsense. I left Agrofert in 2014 and I got rid of it based on the Lex Babis,” he told journalists, alluding to the tightened conflict of interest law that forced him, in his then capacity of a deputy PM and finance minister, to transfer Agrofert to trust funds in February 2017, otherwise Agrofert would have lost the right to some subsidies.

“I acted in accordance with law. I do not control Agrofert. I left it and transferred it to trust funds,” Babis said.

Agrofert is the Czech number one group in agriculture and the food-processing industry, number two in chemical industry and a major player in the fields of forestry and media. Among others, it owns the Mafra publishing house that issues national dailies Lidove noviny (LN) and Mlada fronta Dnes (MfD).

Agrofert said in a press release later today that the term “final user of effects”, how Slovakia describes Babis’s relation to Agrofert’s Slovak-based companies, cannot be confused for a “controlling person,” which Babis is not.

He is the final user of effects because he established the relevant trust funds and is their beneficient, Agrofert said.

TI, nevertheless, opposed this saying that the Slovak term “final user of [a corporation’s operation] effects” corresponds to the Czech term “real owner” based on the European directive against money laundering.

“As a result, a legitimate conclusion can be drawn that Andrej Babis indirectly controls the Agrofert holding. One can control a legal entity even without owning it. Based on the law, a property in a trust fund is a property without an owner, but this does not prevent it from being controlled by persons in the trust funds,” TI wrote.

The trust funds in which Babis placed Agrofert last year are supervised by boards comprised of people close to Babis, including his wife Monika.

Last year, Agrofert employed some 33,000 people, including 22,000 in the Czech Republic. Its consolidated profit reached 4.8 billion crowns last year, a 38 percent decline as against 2016.